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Here are five money rules every investor must know.
Rule of 72
It tells you the number of years required to double your money. Divide 72 by your investment’s annual return, and you will get the approximate number of years it takes.
For eg, if you want to know how long it will take to double your money at 8% interest, divide 72 by 8 and get the answer; in this case, it's 9.
Rule of 114
It's a quick estimate wherein you divide 114 by your investment's annual return to determine how many years it will take for an investment to triple.
For eg, if you want to triple your investment at 9% interest, divide 114 by 9 and get the answer; in this case, it's 12.67. Thus, it takes about 12-13 years.
Rule of 144
It's a formula wherein you divide 144 by your investment’s annual return to estimate how many years it will take for an investment to grow to four times (quadruple) its original value.
For eg, to know how long it will take to quadruple your money at 11% interest, divide 144 by 11 and get the answer; in this case, it’s 13.09. Thus, it will take 13 years.
This rule recommends putting 50% of your money toward needs, 30% toward wants, and 20% toward savings.
50-30-20 rule
It's designed to create a buffer against life's unpredictable events. It recommends setting aside liquid cash equivalent to three to six months of your essential monthly expenses.
Emergency fund rule
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